Indiana Security Deposits: What Landlords and Tenants Need to Know

6 min read · Updated April 17, 2026

This article is general information, not legal advice. For specific situations, consult an Indiana-licensed attorney. The controlling statute is Indiana Code 32-31-3.

Security deposits generate more end-of-lease disputes than any other single issue in property management. Most of those disputes are avoidable. Indiana's law is relatively short and relatively clear — the gap is usually that landlords and tenants each know part of it, not all of it.

The core rule: 45 days, itemized

Under IC 32-31-3-12, a landlord has 45 days after the tenant vacates and provides a forwarding mailing address to do one of two things:

• Return the full deposit; or
• Return the balance of the deposit along with an itemized written statement of any deductions.

The 45-day clock starts at the later of (a) the date the tenant delivers possession back to the landlord or (b) the date the landlord receives the tenant's forwarding address in writing. Tenants who do not provide an address in writing give up significant protections — always provide it in writing when you move out.

What can be deducted

Under Indiana law, a landlord may deduct for:

• Unpaid rent owed under the lease, including rent through the notice period if required by the lease.
• Damage to the property beyond ordinary wear and tear — things like holes in drywall larger than normal picture hangers, broken fixtures, pet damage, or staining.
• Unpaid utility charges that the tenant was responsible for under the lease.
• Other charges specifically authorized by the lease and not prohibited by law.

What cannot be deducted

“Ordinary wear and tear” is the line, and Indiana courts have generally treated it as the deterioration that happens from normal use over time. You cannot deduct for:

• Minor carpet wear in traffic paths after multiple years of occupancy.
• Faded paint or small nail holes from normal picture hanging.
• Appliance breakdown caused by age rather than misuse.
• Routine cleaning between tenancies at the level a reasonable tenant would leave the unit.

The most common landlord error is charging a flat “cleaning fee” or “repainting fee” that bears no relationship to the actual condition of the unit. Deductions must reflect actual, documented costs.

Move-in and move-out documentation

Both sides are protected by documentation. Before the tenant takes possession, the unit should be photographed or walked with a written condition report; both parties should have a signed copy. At move-out, the same walk should be repeated.

Tenants: take your own photos on move-in day, including inside cabinets, under sinks, and close-ups of any existing damage. Email them to yourself so the file has a timestamp. On move-out, do the same.

Landlords: do not skip the written condition report. Verbal agreements about condition are effectively unenforceable later.

If the landlord fails to comply

IC 32-31-3-12 provides that a landlord who fails to return the deposit or provide the itemized statement within 45 days is liable for the amount the tenant is entitled to recover, plus reasonable attorney's fees. This is a meaningful deterrent — it is almost always cheaper for a landlord to be timely and specific than to litigate a late or unsupported deduction.

How to avoid the common disputes

• Put it in the lease. The lease should specify what constitutes damage beyond wear and tear for that specific property.
• Walk the unit, don't guess. A real walk-through with photos at move-in and move-out eliminates most disputes.
• Bill actual costs, not estimates. Keep invoices and receipts; attach them to the itemized statement.
• Send the statement on time. 45 days is not a suggestion. Calendar it the day the tenant moves out.
• Provide the forwarding address in writing. Tenants, this protects you under the statute.

If you have a specific situation you want to discuss, contact us. If it involves a potential legal dispute, talk to an Indiana-licensed attorney — we are happy to refer you to local counsel experienced in landlord-tenant matters.

Related reading: Our rental requirements and How to apply.